Hill raises no objections to Reith advising Tenix

By Craig Skehan, Defence CorrespondentAugust 27 2002

The Defence Minister, Robert Hill, says he has no objections to his predecessor, Peter Reith, advising defence industry company Tenix on its bid to buy the Government's Australian Submarine Corporation (ASC).

This comes amid industry concerns over the value of Mr Reith's knowledge from his time as defence minister before retiring at the last federal election.

At stake is a move away from competitive tendering and the future of billions of dollars worth of Government defence contracts, including the construction of new air warfare destroyers.

In an interview with the Herald, Senator Hill argued that advice Mr Reith now gave to Tenix was an internal company matter and not one for the Government.

He said the only restriction should be in relation to specific contract details of which Mr Reith would have had knowledge from his period as minister. However, one industry source told the Herald it was clear that the main reason Tenix had engaged Mr Reith was because of his previous government involvement in relation to the future of naval shipbuilding.");document.write("

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The shipbuilding industry is involved in intensive lobbying as federal cabinet prepares to make crucial decisions on a rationalisation program centred on the sale of the ASC.

Tenix head Paul Saltieri has been reported as expressing confidence that the Government will choose his company to acquire the ASC and it will then become Australia's major naval shipping industry operation for decades to come.

Senator Hill has not ruled out building a wider consortium around the sale of the ASC which could include Tenix's main rival, the formerly Government-owned ADI, as well as smaller firms.

However, the minister has also left open the option of the cabinet appointing Tenix or another company as the lead player, through acquisition of the ASC, which would sub-contract work to so-called "second tier" companies.

At a media conference on July2, Senator Hill said he had no problem if Mr Reith was "giving general advice on strategic matters" to Tenix.

However, Senator Hill added at the time: "I would not expect him to be involved in contracts in which he played a significant role in the development of the framework for those contracts."

Before retiring, Mr Reith was engaged in drawing up policy proposals on naval shipbuilding rationalisation and the dumping of competitive tenders in favour of so-called "strategic partnerships".

A spokesman for Tenix said last night that Mr Reith was now "providing strategic advice on issues relating to defence industries" to the company, but not on individual contracts.

Options for the future of the shipbuilding industry are canvassed in a report presented to Senator Hill by his department last week and he is due to take a submission to cabinet next month.

In the interview with the Herald, Senator Hill was asked about Mr Reith's consultancy and the argument that he should not be advising Tenix on the Government's forthcoming decisions on naval shipbuilding.

"No, I would say what he advises Tenix is between him and Tenix," Senator Hill said.